Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed that FAR 25.103, Exceptions, be amended to clarify the intent of the list of items determined to be nonavailable for purposes of the Buy American Act (BAA), and emphasize the need to conduct market research for potential domestic sources.

SUPPLEMENTAL INFORMATION: The BAA requires that only domestically mined, produced, or manufactured articles may be procured for public use in the United States. The BAA provides several exceptions to this requirement, one of them being for articles not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality (paragraph (b)(1) of FAR 25.103, Exceptions). Paragraph (a) of FAR 25.104, Nonavailable Articles, lists the articles that meet the conditions of this exception.

The FAR 25.104(a) list is a comprehensive and wide-ranging mix of natural resources, compounds, materials, and other items of supply. Although some articles on the list have no known domestic production sources (for example, quartz crystals and vanilla beans), many are known to have some domestic sources, but those sources have been determined in the past to be inadequate to meet U.S. demand (for example, goat and kidskins (negligible domestic production); crude iodine (5% of U.S. government and nongovernment demand); and bismuth (not in excess of 50% of U.S. government and nongovernment demand). On May 18, 2004, a request for comments was published asking for information on which of the articles listed in FAR 25.104(a) are now mined, produced, or manufactured in the U.S. in sufficient and reasonably-available commercial quantities and are of a satisfactory quality. Also, comments are sought on the appropriateness of including items on the list for which there are domestic sources that can meet 50% of total U.S. demand.

This proposed rule is intended to clarify the purpose and procedures of the nonavailability list. The following are the changes that would be made to FAR 25.103(b) and FAR 25.104(b):

Introductory text would be added to explain that the BAA nonavailability exception does not mean that these items are completely nonavailable from U.S. sources, but that they are of a class or kind that is not mined, produced or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality.

The information in FAR 25.104(b), which addresses how a contracting officer is to handle when he or she learns that an article on the list is available domestically in sufficient and reasonably available quantities of a satisfactory quality, would be moved to FAR 25.103(b) to accompany the language that addresses possible additions to the list.

The following statement would be added: "This [nonavailability] determination does not necessarily mean that there is no domestic source for the listed items, but that domestic sources can only meet 50% or less of total U.S. government and nongovernment demand."

Currently, FAR 25.103(b) permits the contracting officer to rely on the list unless the contracting officer learns that an article on the list is available in sufficient and reasonably available quantities of a satisfactory quality (current FAR 25.104(b), proposed FAR 25.103(b) (see above)).

Because market conditions may change, and items on the list may be available in sufficient quantity and quality for a particular acquisition (though not necessarily in a quantity sufficient to meet total U.S. demand), the procuring agency would be required to take a more "proactive role" by conducting "market research appropriate to the circumstances, including seeking of domestic sources. This applies to acquisition of an article as an end product, or a significant component (valued at more than 50% percent of the value of all the components)..." The introduction to the proposed rule states, "The proposed rule does not require the contracting officer to do market research seeking domestic sources for articles on the list of nonavailable articles that are minor components of an end item."

A new FAR 25.104(b) would be added, which would state, "This [nonavailability] list will be published in the Federal Register for public comment no less frequently than once every five years. Unsolicited recommendations for deletions from this list may be submitted at any time, and should provide sufficient data and rationale to permit evaluation..."